Morgan Stanley Euro To Dollar Forecast: EUR/USD At 1.25 By June 2026 - Exchange Rates Org UK
Morgan Stanley has projected a bullish outlook for the EUR/USD, forecasting a target of 1.25 by June 2026. This perspective reflects a broader confidence in the euro's appreciation against the dollar, driven by potential macroeconomic dynamics favoring the Eurozone.
What the desk is arguing
The desk agrees with Morgan Stanley's outlook, highlighting that the current spot at 1.1500 is considerably below their forecast of 1.25 by June 2026. This suggests room for upward movement if underlying economic factors, such as interest rate adjustments and growth differentials, align favorably for the Eurozone.
Moreover, our internal consensus of 1.2200 by December 2026 supports this trajectory, indicating alignment with the bullish outlook emerging from several firms. The counterfactual scenario would imply a stagnation or decline of the euro, which feels less likely given the growing optimism in Eurozone economics.
Where it sits in our coverage
Our current consensus target for EUR/USD is 1.2200 for December 2026, with other firm targets showing a spread among major banks. For example, firms such as Goldman and Deutsche Bank have forecasted targets of 1.2500 and 1.2500, respectively, for the same time frame, reflecting a strong consensus for euro strength.
- Goldman: Dec26 1.2500
- Deutsche Bank: Dec26 1.2500
- MUFG: Dec26 1.2400
This compares well against Morgan Stanley's revised target of 1.1600 by December 2026, which appears to be an outlier in our aggregation. Overall, the existing forecast landscape offers considerable optimism tied to the euro's performance.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Morgan Stanley projects EUR/USD to reach 1.25 by June 2026, a bullish sentiment bolstered by favorable economic conditions.
- 02Our consensus target is 1.2200 for Dec26, which is supportive of the bullish outlook from multiple firms.
- 03The current market position of 1.1500 presents a substantial opportunity for upward adjustment towards projected targets.
Market implications
If the euro rises towards the projected targets, we could witness significant adjustments in capital flows and investment strategies, shifting preferences towards euro-denominated assets. A strengthening euro might also affect trade balances and economic policies within the Eurozone.
Risks to this view
Key risks to this outlook include shifts in U.S. Federal Reserve policy, geopolitical developments, and economic data releases that might unexpectedly favor the dollar. Additionally, any adverse economic indicators from the Eurozone could undermine the bullish sentiment implied by the forecasts.
Sources & References
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